15 October 1997 GST/HST Interpretation HQR0000842 - Coin Machines - GST/HST Status of Fee/Commission

                                                                        Case: HQR0000842

Dear XXXXX

Thank you for your letter dated August 1, 1997 and subsequent Fax Transmission dated September 2, 1997, addressed to XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the fee/commission charged by your client for using their coin machine. We understand that you were advised in a telephone conversation on September 3, 1997 with XXXXX that your request has been forwarded to this office for reply.

Background

1. Your client, who is unnamed, has business operations located in XXXXX

2. Presently your client is not registered for GST/HST purposes.

3. It installs a certain type of coin machine, in stores, that accepts customers' loose change and issues a voucher for the full amount less a commission which is currently set at XXXXX %. This voucher is subsequently redeemable at the store's cash register in exchange for paper money.

4. The coin machines which are manufactured in XXXXX are designed to accept all types of coins and they will reject items such as tokens, chips etc. The coin machine counts the amount of coins deposited and gives the option to confirm this amount. If this amount is confirmed the machine issues a voucher which shows the full amount deposited less the fee charged for a net amount that can be redeemed. (In the event that the amount is not confirmed as being correct, the machine rejects the money and may start over again).

5. The voucher can then be used towards purchases in the store or it may be redeemed for paper money.

6. Presently, your client has installed one coin machine at XXXXX and is in the midst of setting up a contract with XXXXX to install similar type coin machines.

Interpretation Requested

What is the GST/HST status of the fee/commission that is charged by your client for the use of this coin machine?

Interpretation Given

Based on the information provided it is our view that the commission/fee that is charged by your client for the use of the coin machine would fall under the definition of a "financial service" under paragraph 123(1)(a) of the Excise Tax Act (the "Act") as "the exchange, payment, issue, receipt or transfer of money, whether effected by the exchange of currency, by crediting or debiting accounts or otherwise" and would therefore, be exempt from GST/HST. A supply of a financial service is an exempt supply for GST/HST purposes pursuant to section 1 of Part VII of Schedule V to the Act.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.

For your convenience, please find enclosed a copy of section 1.4 of Chapter 1 of the GST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact the undersigned at (613) 952-3413.

Yours truly,

T.R. Côté
Rulings Officer
Financial Institutions and Real Property Division
GST/HST Rulings and Interpretations Directorate
Policy and Legislation Branch

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